• Saturday, June 15, 2024
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Fuel shortage getting worse as depots, petrol stations run dry

Reminiscences of fuel scarcity

Nigeria’s petrol shortage is bitting harder and will get even worse as the national oil company, NNPC struggles to get emergency supplies from dealers who appear unwilling to enter into fresh supply deals following suggestions that some are being owed crude for the refined products they supplied earlier.

Consequently, oil depots and petrol stations in the crucial Lagos supply area have dried up with most stations no longer selling petrol, according to investigations by our reporters.

Refined products are supplied by selected firms which enter into the opaque DSDP, the so-called direct supply, direct purchase agreements under which the suppliers get crude from NNPC in return for a given quantity of refined products but scandal broke out two weeks ago after it became clear that some of the latest products sent to the country were of the wrong specification.

According to one depot owner, “we were told to await supplies but so far, the tanks are empty and you can see the pile of trucks waiting outside for products. As it is now, we do not know when the products will arrive.”

A senior banker involved in the financing of part of the supply chain said he had been informed that some of the suppliers are not showing much interest in bringing in emergency supplies because “they were being owed crude oil from past supplies made to the country.”

At a meeting with key stakeholders in Lagos last week at which a group Executive director from the NNPC was present, it had been agreed that to ease the current fuel shortage, the NNPC would have to bring in fresh supplies in huge quantities in the immediate term. This has not happened.

Sources told BusinessDay that greed and excessive profiteering were to blame for the scandal that has been associated with the revelation that a group of contractors to the Nigerian National Petroleum Corporation imported the wrong specification of petrol that contained an overbearing proportion of methanol into the country in January.

The off-spec petrol came in from traders in Belgium with mainly methanol which is about 50 percent cheaper than the usual grade of petrol allowable in Nigeria.

A BusinessDay investigation that involved speaking to well-informed private and government officials involved in the downstream sector of the petroleum industry, showed that the bid was a deliberate ploy to make a huge profit.

According to one source, “the people who did this should have known exactly what they were doing. Nigeria does not test.”

Press reports say the president Muhammadu Buhari who many do not remember is also the Petroleum Minister, is said to be angry but it is unclear against whom his anger is directed.

Read also: A nation of adulterated fuel and adulterated stories

Today, only the NNPC can select firms that are to be licensed to take crude oil and also bring in refined petroleum products in return.

A leading engineer with significant retail petrol experience said, “the NNPC adopts this rather opaque and uncompetitive process whereby it chooses the company which gives crude oil and they in return to bring back to the country, refined products.

NNPC chooses the companies, the volume, and the fiscal regime. The process is shrouded in secrecy and when it blows up like now, all Nigerians are meant to pay the huge price.”

To clear up the mess created by the shortage, Nigeria is now having to buy refined products from the spot market where traders charge huge margins.

In place of the current process, marketers are calling for an open, competitive, and fair process that will involve opening up the market to any Nigerian firm with the competence to handle such national tasks.